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18-0103 Wednesday “Daily Bugle”

18-0103 Wednesday “Daily Bugle”

Wednesday, 3 January 2018

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. State Amends ITAR to Adjust Civil Monetary Penalties for Regulatory Provisions, including the AECA and the CWC Act 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Temporarily Closes Ports 1601 (Charleston, SC), 1701 (Brunswick, GA), and 1703 (Savannah, GA)
  4. State/DDTC Posts Name Change Announcement for DXC Technology
  1. Defense News: “Norway Suspends Arms Exports to UAE Amid Yemen conflict”
  2. Reuters: “Turkish Banker Loses Second Bid for Mistrial in U.S. Sanctions Case”
  3. ST&R Trade Report: “Statements to be Deployed to ACE on 6 January”
  1. M. Volkov Releases “2017 FCPA Year in Review” Podcast
  2. Gary Stanley’s ECR Tip of the Day
  3. R.C. Burns: ” North Pole Confirms Nice Children in Cuba and U.S. Received Presents on Christmas”
  1. Full Circle Compliance and the Netherlands Defense Academy Will Present “Winter School at the Castle”, 5-9 Feb 2018 in Breda, the Netherlands
  1. ITAR Amended Today, New BITAR Edition Published 
  2. Bartlett’s Unfamiliar Quotations 
  3. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (8 Dec 2017), DOD/NISPOM (18 May 2016), EAR (27 Dec 2017), FACR/OFAC (28 Dec 2017), FTR (20 Sep 2017), HTSUS (26 Dec 2017), ITAR (3 Jan 2018) 
  4. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. 
State Amends ITAR to Adjust Civil Monetary Penalties for Regulatory Provisions, including the AECA and CWC Act
(Source: Federal Register, 3 Jan 2018.) [Excerpts.]
 
83 FR 234-237: Department of State 2018 Civil Monetary Penalties Inflationary Adjustment
 
* AGENCY: Department of State.
* ACTION: Final rule.
* SUMMARY: This final rule is issued to adjust the civil monetary penalties (CMP) for regulatory provisions maintained and enforced by the Department of State. The revised CMP adjusts the amount of civil monetary penalties assessed by the Department of State based on the December 2017 guidance from the Office of Management and Budget. The new amounts will apply only to those penalties assessed on or after the effective date of this rule, regardless of the date on which the underlying facts or violations occurred.
* DATES: This final rule is effective on January 3, 2018. …
* SUPPLEMENTARY INFORMATION: … On December 15, 2017, OMB notified agencies that the annual cost-of-living adjustment multiplier for 2018, based on the Consumer Price Index, is 1.02041. Additional information may be found in OMB Memorandum M-18-03, here. This final rule amends Department CMPs for fiscal year 2018.
 
Overview of the Areas Affected by This Rule
 
Within the Department of State (Title 22, Code of Federal Regulations), this rule affects four areas:
  (1) Part 35, which implements the Program Fraud Civil Remedies Act of 1986 (PFCRA), codified at 31 U.S.C. 3801-3812;
  (2) Part 103, which implements the Chemical Weapons Convention Implementation Act of 1998 (CWC Act);
  (3) Part 127, which implements the penalty provisions of sections 38(e), 39A(c), and 40(k) of the Arms Export Control Act (AECA) (22 U.S.C. 2778(e), 2779a(c), 2780(k)); and
  (4) Part 138, which implements Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, and prohibits recipients of federal contracts, grants, and loans from using appropriated funds for lobbying the Executive or Legislative Branches of the federal government in connection with a specific contract. …

Part 138
 
Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, provides penalties for recipients of federal contracts, grants, and loans who use appropriated funds to lobby the Executive or Legislative Branches of the federal government in connection with a specific contract, grant, or loan. Any person who violates that prohibition is subject to a civil penalty. The statute also requires each person who requests or receives a federal contract, grant, cooperative agreement, loan, or a federal commitment to insure or guarantee a loan, to disclose any lobbying; there is a penalty for failure to disclose.
 
Applying all previous adjustments in accordance with the 2015 Act, the maximum penalties for both improper expenditures and failure to disclose, was: For first offenders, a penalty of $18,936; for others, not less than $19,246, and not more than $192,459. Applying the 2018 multiplier (1.02041) provided by OMB, the new maximums are: For first offenders, $19,322; for others, not less than $19,639, and not more than $196,387.

 
Summary



Jerry C. Drake, Acting Executive Director, Office of the Legal Adviser and Bureau of Legislative Affairs, Department of State.

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OGSOTHER GOVERNMENT SOURCES

OGS_a12. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

[No items of interest noted today.]
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OGS_a34.

DHS/CBP Temporarily Closes Ports 1601 (Charleston, SC), 1701 (Brunswick, GA), and 1703 (Savannah, GA)

 
On 3 January 2018, a local closure day is granted to all who file entries at the Port of Charleston, SC (1601). CBP is extending an additional day, without penalty, for any entry summaries and payments of duties that were due on 3 January 2018 in the Port of Charleston, SC.
 
The Port of Charleston, SC Port Office will be closed on Wednesday, 3 January 2018 due to inclement weather. 
Depending on road conditions, the port projects reopening and resuming normal business operations at 0800 hrs, Thursday, 4 January 2018.
 
Also, on 3 January 2018, a local closure day is granted to all who file entries at the Ports of 1701 (Brunswick, GA) and 1703 Savannah, GA). CBP is extending an additional day, without penalty, for any entry summaries and payments of duties that were due on 3 January 2018 in the Ports of 1701 (Brunswick, GA) and 1703 (Savannah, GA).

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OGS_a45.

State/DDTC Posts Name Change Announcement for DXC Technology

(Source:
State/DDTC, 1 Jan 2018.)
 
The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) has posted on its website a name change announcement for Computer Sciences Corporation to DXC Technology.  

The announcement is available here

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NWSNEWS

NWS_a1
6. Defense News: “Norway Suspends Arms Exports to UAE Amid Yemen conflict”

(Source: Defense News, 3 Jan 2018.) [Excerpts.]
 
Norway said Wednesday it has suspended exports of munitions and arms to the United Arab Emirates as a “precautionary line,” based on its assessment of the situation in Yemen, where a Saudi-led coalition including the UAE has been fighting Shiite rebels for nearly three years.
 
Foreign Minister Ine Eriksen Soreide said she has “no information” that any of Norway’s military exports have been used in Yemen, but that there’s “great concern” over the humanitarian crisis there.   
The Emirati government offered no immediate comment on Norway’s decision. …
 
On Tuesday, Norwegian newspaper Verdens Gang published a video by the Yemeni rebels, known as Houthis, in which they claim to have seized “a U.S. spy submarine.”
 
The Norwegian newspaper said it was a REMUS 600 autonomous underwater vehicle made by Norway’s Kongsberg group. There was no comment from Kongsberg or from the Saudi-led coalition. It was also unclear when the sub was purportedly seized.
 
Eriksen Soreide said Norway has allowed the sale of weapons and ammunition to the UAE since 2010. The decision to suspend sales for so-called A-material – munitions and arms – was made Dec. 19 and announced on Wednesday.
 
Norwegian news agency NTB said Norway’s exports of weapons, munitions and other military equipment to the UAE were worth more than 100 million kroner (U.S. $12.3 million) in 2016.
 
Line Hegna, of Norway’s chapter of the international aid group Save the Children, said the decision was “important and the right thing to do.”  
“The decision taken by the Norwegian government can act as an example for other exporting nations to act responsibly in the face of repeated violations of international humanitarian law,” she said in a statement to The Associated Press.

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NWS_a2
7Reuters: “Turkish Banker Loses Second Bid for Mistrial in U.S. Sanctions Case”

(Source: Reuters, 3 Jan 2018.) [Excerpts.]
 
A U.S. judge on Tuesday refused to order a mistrial in the case of Mehmet Hakan Atilla, an executive at Turkey’s majority state-owned Halkbank who is charged with helping Iran evade U.S. sanctions.
 
U.S. District Judge Richard Berman in Manhattan federal court rejected arguments by Atilla’s lawyers that the trial was tainted when prosecutors asked Atilla, during a Dec. 19 cross-examination, whether he remembered that a report by a Turkish expert had concluded he violated sanctions. … 
Atilla’s lawyers moved for a mistrial on Dec. 20. …
 
At the center of the three-week trial was testimony from Turkish-Iranian gold trader Reza Zarrab, who pleaded guilty to charges of violating sanctions and testified for U.S. prosecutors.  
Zarrab testified that Atilla helped design fraudulent gold and food transactions that allowed Iran to spend its oil and gas revenues abroad, including through U.S. financial institutions, defying U.S. sanctions.  
Zarrab also implicated Turkish officials in the scheme, including President Tayyip Erdogan. …
 
Atilla has denied all of the charges against him. …
 
U.S. prosecutors charged nine people in the criminal case, though only Zarrab, 34, and Atilla, 47, were arrested by U.S. authorities. 

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NWS_a3
8ST&R Trade Report: “Statements to be Deployed to ACE on 6 January”

(Source: Sandler, Travis & Rosenberg Trade Report, 3 Jan 2018.) [Excerpts.]
 
On 6 January 2018, the Automated Commercial Environment will become the system of record for all statements with the exception of reconciliation statements, which will be deployed to ACE on 24 February.
 
U.S. Customs and Border Protection states that no later than Jan. 13 it will deploy ACE statement reports with ACE statement data and the legacy ACE account revenue reports universe will no longer be available. The new ACE statement reports will be available under the statements tab found in the applicable trade account workspace. In addition, two existing “quickview” reports for brokers and importers (AR-007) will remain available in ACE. … 


 

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COMMCOMMENTARY

COMM_a01
9. M. Volkov Releases “2017 FCPA Year in Review” Podcast

(Source: Volkov Law Group Blog, 1 Jan 2017. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
FCPA enforcement continued in 2017 with an increased emphasis on individual enforcement. Despite early questions as to the new administration’s commitment to FCPA enforcement, the Justice Department and the SEC continued to push aggressive enforcement cases, building on well-established relationships with global law enforcement partners.
 
In a significant development, the Justice Department issued a new FCPA Corporate Enforcement Policy, which created a declination presumption for companies that voluntarily disclose FCPA violations, fully cooperate and remediate their compliance programs.
 
In this episode, Michael Volkov discusses the FCPA Year in Review and significant trends.

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COMM_a2
10. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update, 3 Jan 2018. Available by subscription from
gstanley@glstrade.com
.)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
 gstanley@glstrade.com
.
 
Subsidiaries, parent companies, and sister companies are legally distinct from listed entities in the EAR’s Entity List at Supplement No. 4 to EAR Part 744. Therefore, the licensing and other obligations imposed on a listed entity by virtue of its being listed do not per se apply to its subsidiaries, parent companies, sister companies, or other legally distinct affiliates that are not listed on the Entity List. If, however, such a company, or even an unaffiliated company, acts as an agent, a front, or a shell company for the listed entity to facilitate transactions that would not otherwise be permissible with the listed entity, then the company is likely violating, inter alia, General Prohibition 10, EAR § 764.2(b) (causing, aiding, or abetting a violation), and possibly other subsections of EAR § 764.2 as well.
 
Those who export, reexport, or transfer items subject to the EAR with knowledge that the items are destined to a subsidiary, sister, parent, or other affiliate of a listed entity are encouraged to take extra due diligence steps to ensure that (i) the items are not ultimately destined for the listed entity and (ii) the affiliate is a separate legal entity (as opposed to a branch or operating division of the listed entity). If one is uncertain whether a planned transaction involving an actor with some relationship to a listed entity would be affected by the obligations pertaining to the listed entity, one may seek an advisory opinion from BIS pursuant to EAR § 748.3.

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COMM_a3
11. R.C. Burns: “North Pole Confirms Nice Children in Cuba and U.S. Received Presents on Christmas”

(Source:
Export Law Blog
, 3 Jan 2018. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067).
 
I have received several inquiries regarding the absence this year of the annual Santa vs. OFAC post. The reason, of course, was this press release, set forth below, from October 14, 2016.
 
A quick call by Export Law Blog to Elf E. McElfface, the head of Santa’s PR department, confirms that this year’s deliveries to children in Cuba and the United States went off without a hitch. Mr. McElfface did caution that there were still a number of Grinches in DC that might at any time reinstate the old rules and urged all Santa supporters to contact their representatives in Congress and the White House to urge that the amended rules stay in place.
  
          FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface,
eemcelfface@gmail.com
or (951) 262-3062
 
Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its
timely revision
of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.
 
Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the
long struggle
over whether teddy bears and other toys – which are not food, medicine, or personal communications devices – could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT-Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.
 
News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.
 
As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.
 
This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

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TEEX/IM TRAINING EVENTS & CONFERENCES

(Source: Editor)
 

  
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ENEDITOR’S NOTES

EN_0113
.

ITAR Amended Today, New BITAR Edition Published

(Source: Editor)
 
Today’s Federal Register (see Item #1, above) amended ITAR Section 127.10(a)(1) to increase the fines for the annual inflation adjustment.  Therefore, a revised edition of Bartlett’s Annotated International Traffic in Arms Regulations (the “BITAR”), dated 3 Jan 2018, is available for download by subscribers. The BITAR prints to 357 pages on 8 ½” x 11″ paper.  This new BITAR version also updates some footnotes, the AECA Appendix, and Index entries related to value. 
 

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EN_a315
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 8 Dec 2017: 82 FR 57821-57825: Civil Monetary Penalty Adjustments for Inflation
 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M

  – Last Amendment: 18 May 2016: Change 2
: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary 
here
.)


EXPORT ADMINISTRATION REGULATIONS (EAR)
: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 27 Dec 2017: 
82 FR 61153-61162
: Revisions, Clarifications, and Technical Corrections to the Export Administration Regulations

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 28 Dec 2017: 
82 FR 61450-61451: Iraq Stabilization and Insurgency Sanctions Regulations

 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment:
20 Sep 2017:
 
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (1 Jan 2018) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, Census/AES guidance, and to many errors contained in the official text. Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 26 Dec 2017: Harmonized System Update 1709, containing 2,415 ABI records and 489 harmonized tariff records. 

  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.

  – Last Amendment: 3 Jan 2018: 83 FR 234-237: Department of State 2018 Civil Monetary Penalties Inflationary Adjustment

  – The only available fully updated copy (latest edition: 3 Jan 2018) of the ITAR with all amendments is contained in Bartlett’s Annotated 
ITAR

(“BITAR”)
, by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.
 The BITAR is available by annual subscription from the Full Circle Compliance
 
website
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.
 

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EN_a0316
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 
here

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

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